it should go in the webassist/plugins/shopping_cart/process_transaction.php file.
look for the following line:
<form name="checkout_PP_LI_Hid" action="https://www.PayPal.com/cgi-bin/webscr" method="post">
and change it to:
<form name="checkout_PP_LI_Hid" action="https://www.PayPal.com/cgi-bin/webscr" method="post">
<input type="hidden" name="pickup" value="<?php echo isset($_POST['pickup'])?$_POST['pickup']:""; ?>" />